Operationalizing Pro-Poor Growth (OPPG) Work Program
The study entitled "Pro-Poor Growth in the 1990s: Lessons and Insights from 14 Countries" confirms that policymakers who seek to reduce poverty should implement policies that enable their countries to achieve a higher rate of growth. But growth is more effective in reducing poverty in some countries than in others, depending on the capacity of poor people to participate in and benefit from growth. The study highlights several broad policy options to help poor households take advantage of nonagricultural and urban employment opportunities. They include improving the investment climate; expanding access to secondary education; enhancing access of girls to all levels of education; designing labor market regulations to create more formal employment for poor workers; and improving access to infrastructure, particularly roads and electricity, to better link rural areas to small towns and urban centers. Similarly, the study identifies several policy interventions that were important in raising agricultural incomes of poor households in the 1990s. These include lowering transactions costs to access markets through investments in roads and encouraging contract farming and producers’ organizations, as well as strengthening property rights to improve land access and investment incentives for smaller farmers. The study also recognizes the importance of expanding technology available to smallholder producers in arid climates and helping poorer and smaller producers deal with price and climate risk. Finally, it stresses the need to create an incentive framework that benefits all farmers and takes into account the differential impact of price and trade policy reforms on poor households. As with growth strategies, the binding constraints that need to be addressed to enhance the ability of poor people to participate in growth will vary depending on country conditions. For example, population density and the degree of urbanization affect transactions costs and the ability of poor households to participate in agricultural and nonagricultural growth. The extent of initial asset and income inequality not only influences the sensitivity of poverty to growth, but may also point to gender or ethnic discrimination or other inequality traps that keep certain groups of poor households from participating in growth. This study and its background papers are the main output of a work program co-funded by the Department for International Development (DFID), French Development Agency (AFD), and Bundesministerium fur wirtschaftliche Zusammenarbeit und Entwicklung (BMZ) [Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) GmbH, Kfw Bankengruppe (Kfw)].
Other Work Program Outputs Other program outputs are 14 country case studies, 7 sectoral papers that summarize key findings on methodological approaches, policy trade-offs and sectoral and structural policies, and a series of literature reviews and studies using cross-country econometrics. | | The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. |
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Country Case Studies Sectoral Papers Literature Reviews and Cross-Country Econometrics In order to develop the conceptual framework for the work program, three literature reviews have been carried out. They synthesize the current state of knowledge on how to define and measure pro-poor growth, the key policy drivers for pro-poor growth and the extent to which our current knowledge is reflected in national poverty reduction strategies. - A primer on pro-poor growth (Ravallion, 2004) reviews alternative approaches to defining and measuring pro-poor growth, the evidence on the extent to which growth has been pro-poor, the factors that make growth more pro-poor and the extent to which there are known trade-offs between growth and poverty reduction.
- A literature review (Lopez, 2004) synthesizes the current state of knowledge on the relationship between growth, poverty and inequality.
- A review of the poverty-growth diagnostics in PRSs (Nagajaran and Muthuram, 2003) assesses the overall quality of the growth strategies and policies in the first 21 strategy papers and their linkages to poverty in order to better understand how low-income countries are analyzing growth poverty linkages.
Additionally, three studies using cross country econometrics have been prepared that shed further light on the empirical relationship between growth, poverty reduction and inequality and the policies associated with higher rates of pro-poor growth. - In "When I Use a Word...", Cord, Lopez and Page (2004) uses cross country data developed on long-run spells of growth and poverty. They demonstrate that poverty outcomes associated with growth differ widely across regions and countries, and in some cases, growth has even been associated with an increase in poverty. The paper concludes that economic growth alone does not guarantee sustained poverty reduction and for policies must be both pro-growth and pro-poor.
- In "When is Growth Pro-Poor, Cross Country Evidence", Kraay (2004) explores potential sources of pro-poor growth by : (a) decomposing observed changes in cross country poverty data into their growth and distributional components; (b) assessing what explains the differences in the rate of pro-poor growth across countries; and (c) exploring the sensitivity of different poverty measures (poverty headcount, Watts index, etc.) to growth in average incomes.
- In "Pro-Growth, Pro-Poor: Is There a Trade-Off?" Lopez (2004) assesses the impact of pro-growth policies on inequality and growth in the short- and long-run in an effort to better understand the growth-poverty trade-off behind certain macro and structural reforms.
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